The war on investment industry fees has been raging for years, with IFAs in the thick of the action.
It has been a gruelling campaign, with plenty of unintended casualties and pyrrhic victories along the way, mostly inflicted by the Retail Distribution Review (RDR).
That was launched with the noble aim of purging the industry of what journalists (like me) enjoy dismissing as “unscrupulous, commission-hungry advisers”.
It may have been successful on that front, but it also had the unwelcome effect of driving thousands of people away from scrupulous advisers as well.
The result is that almost four out of five over-55s they have made inadequate plans for retirement and fear spending their final years in poverty, according to new research from property website The House Crowd.
More than half do not have a personal pension and worse, have no plans to put one in place. Nearly three out of 10 have no workplace scheme either.
With no “commission-hungry” advisers around to jolly people into investing for the future, too many let the whole thing slide until it is too late.
The last big hope is that savers will start doing it for themselves, via the growing number of online brokers and robo-advice offerings.
However, danger also lurks online, because it is so difficult for private investors to compare fees and charges on the different platforms, and they aren’t always as cheap as they seem.
New website BrokerCompare.info aims to change this by allowing investors to compare the cost of investing in a tax-free individual savings account (Isa), self-invested personal pension (Sipp) or standard trading account.
The site’s search mechanism shows that an investor with £50,000 in funds and £20,000 in shares who trades eight times a year over 20 years would pay just £48 a year with iWeb-ShareDealing.co.uk, owned by Halifax, rising to £463 with Hargreaves Lansdown.
That is an astonishing difference, if correct, and the people behind the site say it shows that the market isn’t working efficiently.
However, the UK’s first broker comparison site isn’t working completely efficiently either, because it fails to compare annual management fees on underlying investment funds, which Hargreaves rebates.
Given the plethora of dealing charges, quarterly fees, underlying fund charges and broker rebates, no wonder private investors struggle to work out what they are really paying.
Casualties of war
The war on charges grinds on and grind on: on 31 March the Financial Conduct Authority will cap early exit penalties on personal pension funds at 1 per cent. The Department for Work and Pensions will introduce a similar cap for company schemes in October.
Nobody is sad to see the back of high fees or unscrupulous advisers, and the best IFAs continue to thrive, often as new model advisers.
Yet all wars have their casualties, as we will discover when the next generation hits retirement and finds itself wholly unprepared.